What Happened?
Shares of multinational media and entertainment corporation Paramount (NASDAQ: PARA) fell 5.7% in the morning session after analysts at Morgan Stanley and Guggenheim expressed a more cautious outlook on the media company's shares.
Morgan Stanley lowered its price target on the stock to $10 from $12, while maintaining its 'Underweight' rating. The investment bank noted that the shares currently trade at a valuation above its peers, which it considers elevated relative to its forecast for "flattish" adjusted operating income growth through 2028. Adding to the negative sentiment, Guggenheim downgraded Paramount Skydance from 'Buy' to 'Neutral.' These actions from Wall Street analysts suggest growing concerns about the company's valuation and future performance.
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What Is The Market Telling Us
Paramount’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 22 hours ago when the stock dropped 4.1% on the news that continued weakness as reports surfaced that the newly merged company with Skydance is preparing for a significant wave of layoffs. The new Skydance-led Paramount is expected to cut between 2,000 and 3,000 positions around November as part of a cost-cutting initiative following its recent $8.4 billion merger. The move is part of a plan to achieve at least $2 billion in cost efficiencies. While the cuts will be company-wide, sources indicate CBS News and local stations are bracing for a particularly significant impact. The company's recent performance has been challenging, with revenue declining 2% annually over the last two years and earnings per share falling. Paramount President Jeff Shell stated the process would be a necessary, one-time event to stabilize the company for the future, adding, "We do not want to be a company that has layoffs every quarter.".
Paramount is up 40.9% since the beginning of the year, and at $14.91 per share, it is trading close to its 52-week high of $16.03 from August 2025. Investors who bought $1,000 worth of Paramount’s shares 5 years ago would now be looking at an investment worth $527.41.
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